Your HR and Payroll compliance and policy solution! Comply with federal, state, and international laws, find answers to your most challenging questions, get timely updates with email alerts, and more with our suite of products.

NEWS

The Forgotten Art: Advocacy on Behalf of Corporate Victims of Federal Crimes

White-collar criminal practitioners have numerous skills and employ them in many different contexts. In the realm of white-collar practice, however, one discipline goes largely unpracticed: corporate victim advocacy.

Victim advocacy is a valuable tool for achieving important objectives for corporations harmed by white-collar crimes. It is also an opportunity for white-collar practitioners to demonstrate their versatility in providing value to corporate clientele. The corporate client may be pleasantly surprised to learn that white-collar counsel is not necessarily limited to performing reactive and expensive damage control but can also, through victim advocacy, proactively achieve positive results including recovery of corporate assets.

Unfortunately, the potential of corporate victim advocacy often is overlooked, resulting in missed opportunities for both corporate victims and their counsel. To avoid this, white-collar practitioners should have a firm grasp of victims' legal rights and the potential advantages and methods of asserting them on behalf of corporate victims.

These topics are discussed below, using the federal system as an example.

Federal Victims’ Rights: A Short Primer

Three main federal victims' rights laws exist. One prescribes a full panoply of victims' rights, while the others relate solely to restitution.

The right to reasonable, accurate, and timely notice of any public court proceeding … involving the crime, or of any release or escape of the accused;

The right [generally] not to be excluded from any such public court proceeding … ;

The right to be reasonably heard at any public proceeding in the district court involving release, plea [or] sentencing … ;

The reasonable right to confer with the attorney for the government in the case;

The right to full and timely restitution as provided in law;

The right to proceedings free from unreasonable delay; and

The right to be treated with fairness and with respect for the victim's dignity and privacy.1

These rights are enforceable in various ways, by the prosecutor and/or the victim.2 For example, the prosecutor and the victim—separately or jointly—can file a motion to enforce them.3 A victim may also file a complaint with the Justice Department alleging violation of these rights by responsible Justice Department employees, who are subject to discipline for violations.4 The CVRA also specifically contemplates victims retaining counsel to enforce these rights.5

Importantly, “crime victim” here means, in pertinent part, “a person directly and proximately harmed as a result of a Federal offense.”6 The term encompasses artificial persons such as corporations.

Under the CVRA, crime victims have a right of restitution. The goal of restitution in federal criminal cases is “to restore a victim, to the extent money can do so, to the position he occupied before sustaining injury.”7 That goal is effectuated via two statutes: the Mandatory Victims Restitution Act of 1996 (MVRA), 18 U.S.C. §3663A, and the Victim and Witness Protection Act of 1982 (VWPA), 18 U.S.C. §3663. These statutes have many similarities, but “the MVRA makes restitution mandatory for the crimes it covers, and the VWRA enables discretionary restitution for non-MVRA crimes.”8 In both, a “victim” is defined in pertinent part as “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered.”9 Again, a corporation can be such a person.10

A client must be a “crime victim,” or a “victim,” to invoke rights under the CVRA, or MVRA or VWRA, respectively. (Hereinafter, unless the context requires otherwise, “victim” refers to a person qualifying as a “crime victim” under the CVRA and/or a “victim” under either the VWPA or MVRA). Victim status will be obvious in some but not all cases,11 and counsel must endeavor to establish that the corporate client has such status whenever possible.

Objectives and Benefits Of Corporate Victim Advocacy

Assuming the corporate client is a victim, the client likely will not know what that means—what the client can gain from victim status or how to get it. Counsel should be prepared to explain what victim advocacy can accomplish and why it should be employed by the client.

The objectives of corporate victim advocacy include enabling the corporate victim to:

stay informed of the status of the criminal investigation or prosecution;

be protected from additional criminal acts of the accused;

urge federal prosecutors to expedite the case;

have input on the form and/or terms of the case's resolution;

make a written victim impact and/or oral victim impact statement at sentencing if desired;

ensure that the court grants an appropriate and adequate restitution order;

ensure that the restitution order is correctly reflected in the written judgment in the criminal case; and

maximize recovery pursuant to a restitution order.

Even sophisticated corporate clients typically need an explanation of these objectives because victims' rights matters are not commonplace for most corporations.

Of course, not all objectives are applicable in every case. Victim advocacy must be case-specific, fitting the needs and budget of the corporate victim at issue. At the outset, counsel and the corporation should identify particular objectives sought from victim advocacy.

Although I served eight years as a federal prosecutor, handling or supervising dozens of cases involving corporate victims, I cannot recall a single occasion on which a corporation actively pursued any of these objectives. Whatever the cause of such inaction, it leaves vindication of victims' rights solely to the executive and judicial branches of government, which may not realize that the corporation possesses and wishes to exercise particular victims' rights. This could deprive the corporation of the information, voice, restitution, prompt closure, or preferred sentencing outcome they might have obtained via victim advocacy. Therefore, a corporate victim generally is best served by retaining its own counsel to promote its interests by pursuing selected objectives.

Achieving Corporate Client Objectives Via Victim Advocacy

Reliable methods exist for pursuing the various objectives of corporate victim advocacy.

Staying abreast of the case:

To keep up with an investigation or prosecution, victims have an option typically unavailable to nonvictims: conferring with the prosecutor as a matter of right under the CVRA. The scope of this right remains unclear. It is unclear how much information a prosecutor must share in conferring with victims' representatives, and the amount shared will depend on the specific case and prosecutor involved. Nevertheless, the CVRA gives victims leverage to push for relatively full disclosure of the status of the case.

Protection from additional criminal acts:

Like any victim, corporate victims may need protection from additional crimes by accused defendants. For example, a corporation may be vulnerable to future hacking by a defendant arrested for previously hacking the corporation's electronic systems. The right to such protection is specifically provided by the CVRA and can be exercised via communications with the prosecutor regarding pretrial bail and detention issues. Counsel can encourage the prosecutor to request pretrial detention of the defendant or at least special conditions of release reasonably calculated to protect the corporation from specific future criminal acts—such as, in the above example, prohibiting the defendant from accessing any computer. Counsel also can convey to the prosecutor pertinent corporate information to help the prosecutor show the court the need for detention or special conditions.

Expediting the case:

Victims have yet another unique prerogative: a chance to seek to expedite the investigation or prosecution. Exercising the right to confer, counsel can prompt the prosecutor to move the case along more quickly. Again, the success of such efforts depends upon the case and the prosecutor involved, but counsel's persistence can move cases to the prosecutor's front burner. However, to my recollection, as a federal prosecutor I never received a request from any corporate victim to expedite a case. I attribute this in part to widespread lack of recognition of a victim's prerogative to attempt to motivate the government to expedite cases.

Providing input on the substance of the case's resolution:

Corporate victims are concerned with the substance, as well as the speed, of the case's resolution. Although the substance of a resolution is ultimately not entrusted to the victim, corporate counsel should not hesitate to discuss substance with the prosecutor, who should take seriously a corporate victim's input as to the form and terms of a case's resolution.

Regarding the form of a resolution, there are several options: declination of prosecution; a guilty plea with or without a plea agreement; an agreement not to prosecute; an agreement to defer a pending prosecution; or trial. A prosecutor should consider the views of any corporate victim, not only to honor the victim's right to confer but also to obtain the corporation's unique perspective regarding key factors bearing on the proper resolution of the case, including the seriousness of the criminal offense and the background of the offender.12 Thus, counsel should make known the corporation's views. For example, how would the corporation feel if prosecution were to be declined? If the case were to go to trial? If a charged defendant were offered a deferred prosecution agreement? Speaking of agreements, what terms would the corporation want included in any agreement with the offender?

The corporation can also offer information bearing on the proper calculation of the U.S. Sentencing Guidelines range. In white-collar cases, the guidelines range typically is driven largely by the amount of “loss” caused by the crime.13 A corporate victim can help the prosecutor accurately determine the total “loss” by providing relevant facts and helpful insight as to the crime's impact on the corporation. The corporation likewise can assist with other determinations necessary to properly calculate the guidelines range, including whether the defendant abused a position of trust within the corporation.14

When I was a federal prosecutor, however, corporate counsel never approached me with such input. By leaving estimated guidelines calculations completely up to me, corporations were taking their chances because my perspective and factual knowledge were never identical to theirs.

Ensuring submission of a written and/or oral victim impact statement if desired:

Under the CVRA, a victim has the right to be reasonably heard at sentencing.15 Accordingly, a corporate victim may provide the court a written victim impact statement (VIS) before sentencing. Counsel should discuss with the corporation whether to do so, a decision that should turn largely on whether a written VIS would promote justice or help achieve specific corporate objectives.

If the client decides to submit a written VIS, it should explore with counsel the statement's possible tone and content. Should the VIS sound indignant rather than conciliatory? Downplay rather than emphasize the crime's effect on the corporation? Provide details regarding the crime? Counsel also can help identify a sufficiently knowledgeable and willing corporate official to execute the statement on the corporation's behalf.

A victim also can be heard by making an oral VIS at the sentencing hearing. If a corporate victim wishes to exercise this right, corporate counsel can ensure this happens by so advising the U.S. Attorney's Office or the U.S. Probation Office before sentencing.

As to what will be spoken, and how, several options exist. They range from reading aloud a previously submitted written VIS to speaking “from the heart” without notes. Each option carries its own drawbacks and advantages. Counsel can help the client make a good choice, one that balances the desire for a compelling oral VIS against the need to minimize the financial and emotional costs of preparing and delivering it. Throughout this process, counsel and the corporation should remember that this may be an excellent opportunity to address an audience (including shareholders, employees, and the general public) beyond just the sentencing court, although the corporation must avoid thereby disclosing nonpublic information it does not wish to reveal.

In sentencings I handled as a federal prosecutor, a written VIS was rare and an oral VIS rarer. This may be due largely to a general lack of understanding of the right to be heard at sentencing or an underestimation of the powerful impact an oral VIS can have on the sentencing court.

Obtaining an appropriate restitution order:

In particular cases, it may be unclear whether a corporation is entitled to restitution—and, if so, in what amount and when. Among the pertinent issues here are whether the corporation qualifies as a “victim,” whether restitution is mandatory or discretionary, how restitution is calculated, and what the schedule (if any) should be for restitution payments. Questions also may arise regarding, for example, the effect of insurance coverage on any restitution order. Counsel should ascertain and then assert the client's position as to each issue.

Regardless of the nuances in particular cases, an informed client generally will want a restitution order, and counsel can help obtain one. Counsel can urge the prosecutor to insist upon restitution in a plea agreement and at sentencing. Counsel likewise can advocate for a particular figure or manner of calculating restitution. Also, counsel can provide to the prosecutor crucial factual information to support the desired restitution order. Moreover, if necessary, counsel can speak at sentencing on the issue of restitution.

Ensuring the written judgment includes the restitution order:

The oral pronouncement of an appropriate restitution order at sentencing is a good start. However, it does a victim little good if it is not reflected—correctly—in the written final criminal judgment, and omissions and clerical errors can occur. For example, even if a restitution order is properly included in the final judgment, the amount or the name of the corporate victim could be stated incorrectly. By scrutinizing the final judgment, corporate counsel may timely catch such mistakes so that an error-free amended final judgment can be requested.

Maximizing chances of recovery on a restitution order:

Although a correct written restitution order is essential, a corporate victim is made financially whole only insofar as it is collected. White-collar counsel can greatly aid corporate clients in the collections process.

First, counsel can inform the corporation of collection options. For example, a victim can obtain from the federal court clerk an abstract of judgment, certifying that a judgment has been entered in its favor in the specified amount. This document then can be recorded consistent with applicable state law, thereby operating as a lien on the defendant's property in that state just like a state court judgment.16

The corporation also should understand the federal government's role in enforcing restitution orders for victims through the Financial Litigation Unit (FLU) of the respective U.S. Attorney's Offices. This role complements or may even overshadow the victim's role, depending on the victim's ability and inclination to undertake its own collection efforts.17

The federal government is authorized to enforce restitution orders,18 and the various U.S. attorneys are responsible for collecting restitution orders.19 It is the Justice Department's policy to try diligently to collect restitution on behalf of victims.20 The federal government has numerous specific collection options,21 which counsel should explain to the corporate client.

Counsel also can discuss enforcement with the prosecutor or FLU attorneys, urging the government to do its part in collecting restitution. Further, counsel can assist the FLU's enforcement efforts by providing additional relevant information regarding the defendant's assets.

Finally, if the government has obtained assets of the defendant pursuant to a forfeiture order, counsel can seek to have those assets transferred to the corporate victim. Depending on the particular case, there are multiple ways to seek assets the government has obtained by forfeiture, including filing with the Justice Department what is known as a petition for remission or mitigation of forfeiture.22 Whether assets actually have been forfeited is a question counsel should raise intermittently with the FLU; if so, whether to seek such assets is a question counsel should raise with the corporate client.

Conclusion

Corporate victim advocacy is too often a neglected aspect of both white-collar criminal procedure and representation of corporate clientele. By assertively advocating on behalf of victimized corporate clients, white-collar counsel can accomplish much for them. Doing so successfully, and cost-effectively, is something of an art form, one that requires knowledge, experience, and judgment. But when counsel do practice this art and practice it well, they and their corporate clients will be glad they did.

Eli Richardson is a member of Bass, Berry & Sims, Nashville, Tenn. He has more than 20 years of private practice and government enforcement experience, including an extensive background in federal and international criminal matters. Before joining the firm in 2010, Richardson served in several high-profile positions with the Justice Department, including two U.S. attorney's offices and the FBI.

This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).